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Agricultural Mechanization and Agricultural Transformation

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Agricultural Mechanization and Agricultural Transformation www.acetforafrica.org Agricultural Mechanization and Agricultural Transformation Paper written by Xinshen Diao, Jed Silver and Hiroyuki Takeshima INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE BACKGROUND PAPER FOR African Transformation Report 2016: Transforming Africa’s Agriculture FEBRUARY 2016 Joint research between: African Center for Economic Transformation (ACET) and Japan International Cooperation Agency Research institute (JICA-RI) Background Paper for African Transformation Report 2016: Transforming Africa’s Agriculture Agricultural Mechanization and Agricultural Transformation Xinshen Diao, Jed Silver and Hiroyuki Takeshima (International Food Policy Research Institute) February 2016 Joint research between African Center for Economic Transformation (ACET) and Japan International Cooperation Agency Research institute (JICA-RI) Contents Executive Summary ............................................................................................................................................. 3 1. Introduction ............................................................................................................................................... 5 2. Definitions and Concepts ....................................................................................................................... 6 Definitions of Mechanization ............................................................................................................... 6 Mechanization and Agricultural Intensification ............................................................................... 7 3. Demand for Mechanization ................................................................................................................... 8 Sufficient demand as a precondition for successful mechanization .............................................. 8 Components of Mechanization Demand ............................................................................................. 8 Farm Size and Mechanization ................................................................................................................ 9 Labor Saving Effects of the Mechanization of Certain Operations ............................................... 9 Market Demand ...................................................................................................................................... 12 Complementary Technologies ............................................................................................................. 13 Utilization and Income Generation Potential ................................................................................... 14 Learning and Demonstration of Mechanization’s Benefits ........................................................... 14 Sequences of Mechanization Demand ............................................................................................... 15 Demand for mechanized plowing ....................................................................................................... 15 Demand for Animal traction ............................................................................................................... 15 Demand for large and small tractors................................................................................................... 17 Demand for post-harvest mechanization .......................................................................................... 19 Demand for mechanized harvesting .................................................................................................. 19 Spatial Variations of Mechanization Demand ................................................................................. 20 4. Mechanization Supply Chains in Africa ........................................................................................... 22 The Supply Chain as a Framework ...................................................................................................... 22 Development of Supply Chains ........................................................................................................... 22 Key Players and Their Functions in Mechanization Supply Chains ........................................... 23 Importation .............................................................................................................................................. 25 Manufacturing of Agricultural Machinery ...................................................................................... 29 Ownership and Service Provision ...................................................................................................... 29 1 Farmer-ownership characteristics ....................................................................................................... 30 Farmer to Farmer Service Provision .................................................................................................... 31 Specialized Service Provision.............................................................................................................. 36 Fabricators, Spare Parts and Maintenance ......................................................................................... 39 Rural repair services .............................................................................................................................. 39 Locally fabricated implements and small machines ....................................................................... 39 5. Roles of Government in Promoting Mechanization ....................................................................... 41 Providing Public Goods to Create an Enabling Environment for the Private Sector ................ 41 Research on Mechanization Demand and Adoption ...................................................................... 41 Support to R&D ...................................................................................................................................... 42 Infrastructure Investments .................................................................................................................. 43 Mechanization Credit Schemes ........................................................................................................... 43 Eliminating Distortions ........................................................................................................................ 44 Potential Roles of Donors in Mechanization Promotion ................................................................ 45 Opportunities for Private-Sector Promotion of Mechanization ................................................... 46 6. Main Messages and Conclusions ........................................................................................................ 46 References ......................................................................................................................................................... 49 2 Executive Summary This paper discusses the current state of agricultural mechanization in Africa and its potential contribution to agricultural and broader economic transformation. This background paper reviews the factors likely to influence farmer demand for mechanization in Africa and details different existing and potential mechanization supply models. Although an empirical analysis of mechanization demand and the effectiveness of supply chains is beyond the scope of this paper, in part due to data limitations, this paper suggests that demand for mechanization may be emerging in some parts of Africa. It also suggests that private sector-driven supply models are better positioned to meet this demand than direct government involvement and certain types of subsidized programs. The paper then identifies possible areas for government support to complement private sector leadership in developing mechanization supply chains. A renewed focus on agriculture’s potential contribution to economic transformation in Africa has resulted in increased attention paid to agricultural mechanization. Nevertheless, African agriculture still relies predominantly on human muscle power, in contrast to other developing regions that have experienced rapid increases in agricultural mechanization over the past few decades. Efforts to promote mechanization in previous decades largely consisted of state-led interventions, which failed due to the lack of demand for mechanization among farmers (Pingali et al 1987). This paper attempts to overcome some of the misconceptions that drove these programs by reviewing definitions of agricultural mechanization and its role in agricultural intensification processes. The paper draws on Boserup (1965) and Ruthenberg’s (1980) theory of agricultural intensification and Hayami and Ruttan’s (1970; 1985) induced innovation theory. According to this framework, agricultural intensification is driven by increased population pressure and rising demand for agricultural products. This in turn prompts mechanization, both through the adoption of existing and the development of new technologies. Essentially, mechanization can be expected to be adopted by farmers when the appropriate conditions arise and would not be profitable in the absence of such conditions. The paper then delves further into the components of demand for mechanization, specifically in Africa. Specifically, it discusses the effects of farm size, labor saving, market demand, the availability of complementary technologies, and demonstration on developing demand. It also describes the sequential
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